The retail apocalypse that began to shake the United States in 2017 has negatively impacted many beloved stores. To name a few, JCPenney, Pier 1 Imports, Forever 21, and Toys R’ Us have filed for bankruptcy and closed many of their stores. These businesses were once incredibly successful, concerning other retail companies. So, how can businesses ensure that the “retailpocalypse” doesn’t affect them? The first step is to understand why it happened to other businesses.
What Created The Retailpocalypse?
By far, the biggest factor that impacted retail stores’ success is e-commerce. The e-commerce giant Amazon has taken over the retail industry, and huge brick-and-mortar companies like Walmart make lots of sales online. There are even online-exclusive brands that have built up large followings, like Casper.
E-commerce took the world by storm in recent years, making it much easier for consumers to shop. Unfortunately, this had repercussions for the retail industry. According to Digital Commerce 360, in 2019, e-commerce sales grew by 14.9 percent while retail sales only grew by 3.8 percent. While these numbers are shocking, they make sense. With online shopping, consumers can easily find items in any size or color they desire. They can also shop from the comfort of their home and don’t have to go hunting for items.
There are a few other factors that contributed to the decline of many retail businesses. According to Business Insider, after the 2008 recession, private equity firms bought out multiple struggling companies. However, these retail companies couldn’t pay off the massive debts from these buyouts, sending them into bankruptcy. There’s also an oversaturation of malls, and consumer visits to them have continuously been declining.
Consumer preferences have also changed. Department stores’ high prices have driven many middle-class consumers to less expensive stores. People have also begun to spend more money on travel and dining rather than clothes, according to The Atlantic.
How Can Businesses Survive The Retailpocalypse?
Even though it seems like the retail industry is doomed, that’s not necessarily true; many brick-and-mortar stores such as Target, Lululemon Athletica, and T.J. Maxx continue to experience success. There are many strategies retail businesses can learn from these successful businesses.
For one, implementing technology can truly help take your business to the next level, increasing revenue and consumer satisfaction. Self-ordering kiosks, online ordering, and automation are key. For instance, Target has self-checkout stations and price checkers, and all three companies have established online ordering websites. Consumers appreciate having different ordering choices and in-store tools that help them find what they need.
Businesses also need to consider making structural changes. Stores can aim to target new demographics, such as people in lower-income brackets, by decreasing the price of some of their items. Dollar stores and Five Below are thriving due to their inexpensive offerings. While items don’t need to be very inexpensive, lower prices can attract more consumers; T.J. Maxx and Costco maintain low prices while still selling high-quality items.
Additionally, big department stores sell a wide range of products, which can overwhelming. Even though Target and Walmart do the same, all of their offerings are in demand and have fair prices. Stores such as Lululemon, Sephora, and Best Buy occupy niches, which attracts specific groups of customers and keeps them coming back.
Remodeling can also create an atmosphere that makes customers want to visit the store. For instance, T.J. Maxx and Target have remodeled many of their stores, giving them a modern feel and improving their organization. Some stores have interactive aspects, such as Apple’s devices displayed for use and Nike permitting in-store exercising. This keeps consumers engaged. Some companies, such as Kohl’s, are even downsizing the square footage of their stores. This lowers the business’s operating costs and personalizes consumers’ experiences further.
While there are many factors that can cause the “retailpocalypse” to affect a business, there are multiple ways in which retail stores can circumvent it and keep their business afloat. The key is adapting to change and not falling behind the competition.